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With debt of Rs 2.82L cr, incoming govt faces daunting task in Punjab

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4 years ago

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With a whopping public debt of Rs 2.82 lakh crore, the incoming government in one of the most fiscally stressed states, Punjab will be faced with the daunting task to usher in much-needed economic reforms as a major component of government earning and borrowing is meant for servicing debt rather than capital expenditure.

Twenty per cent of the annual budget is being spent only to pay the interest on the loans.

As per the latest findings of the Comptroller and Auditor General of India, the state’s financial crisis is set to worsen with the debt likely to reach Rs 3.73 lakh crore by 2024-25.

Government officials told IANS that the state’s debt has increased by Rs 1 lakh crore in the past five years under the current Congress government now led by Chief Minister Charanjit Singh Channi, largely owing to populism.

When this government took over the reins in 2017, it got the legacy of a Rs 2.08 lakh crore debt left by the decade-long rule of the Shiromani Akali Dal-BJP in the state.

An official familiar with the matter told IANS that political compulsions and populist announcements have been taking a huge toll on the state’s finances and this may surge the debt beyond the projected Rs 2.82 lakh crore.

Finance Minister Manpreet Badal in his last budget speech for this fiscal projected the total revenue receipts at Rs 95,257 crore. However, the state has never managed to achieve more than 80 per cent of its revenue target.

Also approximately 40 per cent of the state’s total estimated revenue receipts of Rs 95,257 crore for the current fiscal would go into debt servicing.

As per the budget estimates of an outlay of Rs 168,015 crore for 2021-22, the outstanding debt is likely to be Rs 273,703 crore in 2021-22, which is 45 per cent of the GSDP.

The total outstanding debt of the state as on March 31 is projected at Rs 252,880 crore, which is 42 per cent of the GSDP for 2020-21 and the outstanding debt is likely to be Rs 273,703 crore in 2021-22, which is 45 per cent of the GSDP.

Besides a major component of earnings and market borrowings go into debt servicing, the revenue goes into unproductive expenditure like disbursement of salaries, pensions and power subsidies for the farmers.

Also, say officials, the Covid-19 pandemic has caused a significant deterioration in public finances, adding to pre-existing strains. Also businesses in the state are reeling because of a sluggish economy and poor liquidity.

As per the recent memorandum by the state to the Centre for extending the Goods and Services Tax (GST) compensation, Punjab says being an agrarian economy it was deriving a significant portion of its revenue from the agriculture sector in the pre-GST era by imposition of tax on agricultural produce (mainly foodgrains).

This was realized in the form of the levy of Purchase Tax on agricultural produce at the rate of five per cent of the minimum support price (MSP) of produce collected from the purchaser of such produce.

In addition, an Infrastructure Development Fee at the rate of three per cent was also levied on purchase of foodgrains. The state collected Rs 3,094 crore in 2015-16 from the Purchase Tax and Infrastructure Development Fee alone, i.e. 16.55 per cent of its total tax revenue of Rs 18,692.89 crore during that year.

With the implementation of GST, both the Purchase Tax and Infrastructure Development Fee on foodgrains have been subsumed in the GST.

Since the GST is a destination-based tax and agricultural produce is largely exempted under it, Punjab has experienced a permanent loss of a significant portion of the state revenue.

However, the saving grace for the government is the first half of this fiscal with a hefty increase in revenue from the pre-Covid levels.

The GST revenue comprising state goods and services tax (SGST) and integrated goods and services tax from April to September of 2021 was Rs 7,851 crore, which is 67.55 per cent more than in the corresponding period of 2020, and 54 per cent more than in the pre-pandemic year of 2019-20.

But the area of concern for authorities now is ending GST compensation from the Centre on June 30, unless it is extended by the GST Council, leaving the state to fend for itself thereafter.

A report by the Group of Experts (GOE) led by noted economist Montek Singh Ahluwalia, set up by Chief Minister Amarinder Singh to revive Punjab’s economy, recommended measures like reducing average cost of government debt, banning recruitment in police and bringing pay scales of government employees on par, among others.

The panel in its report to aid medium and long-term revival strategy was categorically clear that unless measures are taken to correct the fiscal situation over the next few years, it will not be possible to achieve the objective of restoring Punjab to its pre-eminent position.

The experts suggested rationalisation of power subsidies given to farmers that is 1.9 per cent of its GDP and grew from Rs 5,670 crore in 2019-20 to Rs 7,180 in 2020-21.

Ahead of the polling for the Assembly elections on February 20, the opposition Aam Aadmi Party (AAP) had accused the previous Akali-BJP and current Congress government of plunging Punjab into debt.

“With the population of 3 crore, today every individual in Punjab has a debt of Rs 1 lakh. Every child who is born in Punjab already has a debt of 1 lakh rupees on them right after their birth,” AAP leader Raghav Chadha told the media.

SAD President Sukhbir Badal, the man known for micro poll management for his now own controlled century old party with the focus on farmers’ interests and justice for them, said Punjab and Punjabis are in a crisis.

“The Congress government did nothing for five years. It reneged on each and every promise made to the people be it complete farm loan waiver, Rs 2,500 per month unemployment allowance, jobs for each household and increase in social welfare benefits.

“It also stalled all development work but simultaneously presided over a sand and liquor mafia and looted the state exchequer. It was due to this that the state’s debt has increased by Rs 1 lakh crore in the last five years alone.”

All the parties were banking on freebies to woo the electorate.

The AAP has promised Rs 1,000 for all women, while the Congress has assured Rs 1,100 per month for needy women. The SAD-BSP alliance has promised Rs 2,000 per month to all women heads of BPL families.

Two-time Chief Minister and former Congress leader Amarinder Singh in his election campaignin stressed Punjab “needs the Centre’s support for its economic revival, which his party, the Punjab Lok Congress, in alliance with the BJP would help achieve.”

The state has no money for development, which will remain a far cry under the false promises of parties like the Congress, AAP and SAD, who were not willing to work in coordination with the Centre, he stressed.

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UPI transaction volume surges almost 13,000-fold in a decade to over 24,162 crore: Govt

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9 hours ago

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August 24, 2026

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New Delhi, Aug 24: The annual transaction volume of Unified Payments Interface (UPI) has surged almost 13,000-fold from 1.78 crore transactions in FY 2016-17 to more than 24,162 crore transactions in FY 2025-26, the Ministry of Finance said on Monday.

UPI, launched on August 25, 2016 by the National Payments Corporation of India (NPCI) under the regulatory oversight of the Reserve Bank of India (RBI), has emerged as the backbone of India’s digital payments ecosystem and a key driver of financial inclusion.

According to the ministry, the value of UPI transactions has also expanded sharply, rising from Rs 0.07 lakh crore in FY 2016-17 to approximately Rs 314 lakh crore in FY 2025-26, representing a more than 4,000-fold increase over the decade.

The platform has become a major pillar of India’s Digital Public Infrastructure, offering an interoperable and real-time payments system that enables seamless person-to-person and person-to-merchant transactions.

The ministry said UPI’s scale, reliability and interoperability have received global recognition, with the International Monetary Fund acknowledging it as the world’s largest real-time payment system by transaction volume. As of 2025, UPI accounted for nearly 49 per cent of global real-time payment transaction volume.

The growth momentum has accelerated further in 2026. Monthly UPI transaction volume crossed the 2,300 crore mark for the first time in May, when 2,320 crore transactions were recorded. The platform subsequently touched a record 2,366 crore transactions in July, the highest monthly volume in its decade-long journey.

Institutional participation has also expanded significantly. The number of banks live on UPI increased from 44 in FY 2016-17 to 703 by FY 2025-26, covering public sector banks, private banks, small finance banks, payment banks and cooperative banks.

The ministry said UPI has witnessed particularly strong adoption in merchant payments. Person-to-merchant transactions accounted for 63 per cent of total transaction volume, while person-to-person transactions contributed 71 per cent of the overall transaction value.

The data also highlights the widespread use of UPI for small-value everyday payments. Around 86 per cent of P2M transactions in FY2026 were below Rs 500, while 59 per cent of P2P transactions were also below Rs 500.

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Vijay govt scraps Parandur airport project, to identify alternative site

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10 hours ago

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August 24, 2026

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Chennai, Aug 24: Tamil Nadu Chief Minister C. Joseph Vijay on Monday announced that the state government would abandon the proposed greenfield airport project at Parandur and identify an alternative site that would cause minimal disruption to farmers and residents.

Making a statement in the Legislative Assembly, CM Vijay said the decision was taken following concerns about the project’s potential impact on agricultural lands, waterbodies and residential settlements in Parandur and surrounding villages.

The Chief Minister acknowledged that Chennai required a second airport because of the rapid expansion of the metropolitan region, rising passenger traffic and increasing demand for cargo transportation. However, he said such a major infrastructure project should not come at the cost of farmers’ livelihoods or result in the large-scale displacement of residents.

The existing Chennai airport at Meenambakkam, operated by the Airports Authority of India, can currently handle about 30 million passengers annually.

CM Vijay accused the previous government of attempting to proceed with the Parandur project despite sustained opposition from residents. He recalled visiting Ekanapuram and nearby villages on January 20, 2025, to meet people protesting against the acquisition of their land for the airport. The Chief Minister said he had publicly opposed the project during a meeting at Vikravandi in October 2024.

While reiterating his government’s support for industrial growth and improved aviation infrastructure, he maintained that Parandur was unsuitable for the airport.

CM Vijay said the government arrived at its decision after consulting senior officials, aviation specialists, academicians and other experts. Technical feasibility studies will now be conducted at alternative locations before the new airport site is finalised.

“As promised, the measures initiated to establish the new airport at Parandur will be abandoned by this government,” he told the Assembly.

Meanwhile, the state government will work with the Airports Authority of India to expand the Meenambakkam airport.

A new Terminal 5 has been proposed in the airport’s northwestern section, along with additional roads and flyovers to improve connectivity. The ongoing construction of Terminal 3 is expected to increase the airport’s annual passenger-handling capacity to 35 million. Terminal 5, once operational, could add another 20 million passengers, taking the overall capacity to 55 million annually.

CM Vijay said the expansion would help Chennai manage its growing aviation requirements until the proposed second airport becomes operational at a suitable alternative location.

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New SIM rules come into effect that blocks excess mobile connections

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10 hours ago

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August 24, 2026

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New Delhi, Aug 24: New SIM card rules came into effect in India from Monday, and telecom companies have been instructed to stop issuing mobile connections to people who have already reached the permitted limit.

The Department of Telecommunications (DoT) has directed telecom operators to identify customers who already hold the maximum number of SIM cards allowed in their name and inform them that a new connection cannot be issued.

Initially, the system will operate on a post‑facto basis, wherein operators can carry out the verification after a new connection has been enrolled and immediately suspend any connection that exceeds the limit.

However, telecom companies have been directed to move to real‑time checks by November 30, 2026.

“Till the time such measures are implemented by a telecom service provider on a post-facto basis, as per terms and conditions of the Customer Application Form (CAF), any mobile connection activated beyond the prescribed limit for a day shall be immediately suspended till resolution of the issue in respect of crossing the permitted limit for mobile connections,” the circular stated.

Under the new rules, an individual can have a maximum of nine mobile connections in their name across telecom operators and licensed service areas in India. However, the limit is lower for customers in Jammu and Kashmir, Assam and the North-East, where they have up to six mobile connections.

DoT will make representative images of subscribers who have reached the maximum limit available on the Digital Intelligence Platform (DIP) from August 23, 2026. Telecom operators must download these images daily to help identify applicants seeking additional SIMs.

The directions also require customers to provide a declaration in the Customer Application Form (CAF) regarding the mobile connections already held in their name across telecom operators and licensed service areas. DoT said the respective Licensed Service Areas (LSAs) will be the competent authorities to decide issues arising from the implementation of the instructions.

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